Canada Post reports $62-million loss before tax in third quarter

OTTAWA, Nov. 24, 2017 /CNW/ – The Canada Post segment lost $62 million before tax in the third quarter, traditionally the postal service’s slowest period of the year. Year-to-date, the Canada Post segment is reporting a profit of $13 million before tax heading into the holiday season when millions of Canadians are expected to make an unprecedented number of purchases online.

The Canada Post segment’s $62-million loss before tax in the third quarter, which ended September 30, 2017, compares to a loss before tax of $60 million for the third quarter of 2016. For the first three quarters of 2017, Canada Post reports a profit before tax of $13 million, compared to a loss before tax of $15 million for the same period in 2016.

The sustained growth in parcels was made possible by Canada Post’s strategic decision in 2011 to become a leader in e-commerce. However, structural challenges – such as Lettermail decline and the pension funding obligation – remain significant long-term threats to financial self-sustainability.

Parcels results

Parcels revenue increased by $129 million or 38.9 per cent in the third quarter, while volumes increased by 16 million pieces or 43.5 per cent compared to the same period in 2016. Domestic Parcels, the largest product category, continued to grow, as revenue increased by $101 million or 43.1 per cent and volumes grew by 11 million pieces or 41.4 per cent in the third quarter. In the first three quarters of 2017, Parcels revenue increased by $257 million or 22.5 per cent, and volumes increased by 32 million pieces or 25.3 per cent when compared to the same period in 2016. For Domestic Parcels, revenue increased by $199 million or 24.3 per cent and volumes increased by 22 million pieces or 22.7 per cent in the first three quarters of 2017, compared to the same period in 2016.1 The increases in revenue and volumes were partially a result of increased business from major commercial customers and solid delivery performance, as well as the continued growth in e-commerce as consumers continue to order more products online. The increases are compared to the third quarter of 2016, when volumes and revenue were affected as customers made alternative delivery arrangements due to labour uncertainty.

Transaction Mail results

Transaction Mail is mostly letters, bills and statements. These volumes for the Canada Post segment decreased by 8 million pieces in the third quarter, which is relatively flat compared to the same period in 2016, which had one extra business day, while revenue increased by $3 million or 2.2 per cent compared to the third quarter a year earlier. The increase in revenue in the third quarter of 2017 is compared to a year earlier, when revenue in the third quarter of 2016 was lower, as a result of fewer mailings due to labour uncertainty. Excluding this impact, Transaction Mail revenue would have declined in the third quarter of 2017 when compared to the same period in 2016. In the first three quarters of 2017, Transaction Mail volumes decreased by 159 million pieces or 5.7 per cent compared to the same period in 2016, while revenue decreased by $92 million or 3.5 per cent.1 The ongoing decline in mail volumes, due to the use of digital alternatives by consumers and businesses, remains a significant challenge for the Corporation.

Direct Marketing results

Direct Marketing volumes increased by 151 million pieces or 17.1 per cent in the third quarter, compared to the same period in 2016, while revenue increased by $15 million or 7.9 per cent. Neighbourhood Mail™, the largest product category by volume, saw revenue increase by $18 million or 25.2 per cent, while volumes grew by 155 million pieces or 24.2 per cent compared to the same period in 2016, mainly due to new and incremental sales to commercial customers. Excluding the negative impact of the labour uncertainty in the third quarter of 2016, Direct Marketing revenue would have decreased in the third quarter of 2017 when compared to the same period a year earlier. In the first three quarters of 2017, Direct Marketing revenue decreased by $6 million or 0.1 per cent, while volumes increased by 171 million pieces or 5.6 per cent compared to the same period in 2016. Neighbourhood Mail revenue increased by $24 million or 9.3 per cent in the first three quarters, while volumes increased by 221 million pieces or 9.6 per cent compared to the same period in 2016.1 Personalized Mail™ and Publications Mail™ volumes and revenue declined in the first three quarters of 2017 compared to the same period last year.

Group of Companies results

The Canada Post Group of Companies2 reported a loss before tax of $25 million for the third quarter of 2017, consistent with the third quarter of 2016. For the first three quarters of 2017, the Group of Companies recorded a profit before tax of $111 million, an increase of $92 million compared to the same period in 2016. Purolator recorded a profit before tax of $31 million in the third quarter of 2017, relatively flat compared to the profit before tax of $32 million in the same period last year. For the first three quarters of 2017, Purolator earned a profit before tax of $84 million, due to business growth, an increase of $49 million compared to the same period in 2016.

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Background

The operations of the Canada Post Group of Companies are funded by the revenue generated by the sale of its products and services, not taxpayer dollars.

1 Adjusted for business (trading) days or paid days, where applicable. For the first three quarters of 2017, there was one less business (trading) day and one less paid day compared to the same period in 2016.

2 The Canada Post Group of Companies consists of the core Canada Post segment and its three non-wholly owned subsidiaries, Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc.